Unicorns — Disruptive product ideas transform into high-value global brands

June 15, 2017
Industry News
Content Provided By:

Rupam Borthakur
CEO, Kantar Insights Hong Kong

Unicorns are privately owned business valued at $1 billion or more. The billion-dollar tech startup, the stuff of which myths were made, may now be more of a reality. A quick look at the BrandZTM Top 100 Most Valuable Global Brands ranking tells the story of how Google, Facebook, Amazon, Tencent, and Alibaba built successful brands and floated them for billions of dollars in a period of two years or less.

The billion-dollar tech startups are here to stay. Snap went public this year valued at $3 billion, and any one of Uber, Xiaomi, Airbnb or Pinterest could be next. So how are these unicorn brands born — how does one go from an embryonic idea to floating for billions of dollars to creating a valuable brand?

The most successful unicorns rarely begin life as money-making machines. They often start as a brilliant technology solution to an unmet consumer need, or they purposefully or inadvertently tap into a changing consumer trend.

So, the first step on the road to being a global and financially viable brand is to ensure consumers think your brilliant solution for meeting an unmet need is different. This creates potential for value share growth.

Rapid scaling

Once a unique idea is proven to work, an emerging brand with the right funding and commercial strategy may begin to go through a period of rapid growth and scaling. This is the point where building Salience is key, a tough task when you need to do so against competitors with bigger budgets.

The Ehrenberg Bass “laws of growth” suggest that success from this point forward is now purely dependent on continuing to drive physical availability (distribution) and mental availability (Salience). This may be true to a point, but it is not the entire truth. First, overemphasizing salience ignores the contribution that high margins make to brand growth. BrandZTM data shows that the ability to command a premium price is driven not by Salience but by Meaningful Difference. This can be an important route to growth for an emerging brand.

Second, although Salience is the biggest driver of growth in categories with short-term purchase cycles, BrandZTM data shows that being Meaningful is a bigger driver of volume growth in categories with longer-term purchase cycles. Being Meaningful is about meeting consumer needs, either functionally or emotionally. In this respect, product or service experience plays a crucial role. If done well, experience drives conversion, turning Salience into sales. Amazon Prime is a fantastic example of the importance of experience. Sixty-three percent of Amazon Prime members convert on the site in the same session— five times the rate of non-Prime members.

Importance of brand

Inevitably, an emerging brand reaches a stage where growth stalls, when technology moves on or is copied as larger competitors with more resources figure out how they can respond to meeting the same consumer need. It could also be that increasing scale brings new challenges that a business struggles to manage. It’s at this stage that building a brand becomes even more important. An emerging business must make a transition from being product and Salience focused to building a Meaningful, consumer-driven brand that appeals to more consumers.

In addition, building a brand improves staff engagement, keeps a business focused and drives consistency. Aligning a business around serving a single- minded purpose, beyond making money, can be a nice way of shifting to a more consumer- and brand-centric business model. Of course, this has to be done credibly and would ideally link to the consumer need that drove the business to begin with.

The final challenge as a brand grows is to build understanding of different consumer and market contexts so that a brand can subtly flex itself to local needs that are critical growth barriers
or facilitators. It may require a fundamentally different business model, a tailored product offering, or more nuanced advertising.
About Kantar MillwardBrown
Kantar Millward Brown is a leading global research agency specialising in advertising effectiveness, strategic communication, media and digital, and brand equity research. The company helps clients grow great brands through comprehensive research-based qualitative and quantitative solutions. Kantar Millward Brown operates in more than 55 countries and is part of WPP’s Kantar group, one of the world’s leading data, insight and consultancy companies. Learn more at www.millwardbrown.com.